Family insurance costs skyrocket 14%

NEW YORK (CNNMoney.com) -- American workers are taking yet another blow to their wallets this year -- a whopping 14% jump in costs to insure their families.

The spike comes even as premiums for family coverage rose only 3%. This discrepancy is a result of cost-conscious companies shifting more of the insurance burden onto employees.

Employees are paying about $4,000 to buy family insurance in 2010, $482 more than they did last year, the Kaiser Family Foundation said Thursday.

Companies still pay the bulk -- nearly $9,800 for a family of four -- but that was down a little from 2009.

The Kaiser survey was conducted between January and May 2010 and polled more than 3,000 employers nationwide.

Over the past five years, employees share of insurance premiums have risen 47%. That has outpaced a 27% jump in overall premiums and an 18% increase in wages, according to Kaiser.

Deborah Chollet, senior fellow and health economist with Washington-based Mathematica Policy Research, said the recession and a turbulent job market are key catalysts for rising insurance costs.

"Employers are struggling to keep their head above water. They're cutting costs just to maintain employment," Chollet said. "One way to do that is to make workers pay more."

In a strong job market a higher turnover rate actually helps companies contain increases in insurance costs, without having to increase workers' share of the expenses.

"New workers spend some time getting acclimated to their new jobs. They may not use their health benefits for a while," said Tracy Watts, senior health care consultant with leading benefits consulting firm Mercer.

In a down economy, the turnover rate is lower and existing employees tend to use their benefits more.

Another factor pushing up insurance costs is a trend whereby young employed adults forgo buying coverage as a way to save money, until they absolutely have to, she said.

This is a big risk for companies, because it can suddenly inflate their health care costs if there's an unexpected rise in the number of sick people buying insurance.

Health reform, Chollet said, may not offset all of the costs but it can help stabilize the overall market.

"The hope is that with reform, there's an increase in the number of insured people and this will help drive down the big increase," she said.

But others aren't so sure. They say employees could see even higher costs in their plans come open enrollment for 2011.

"Next year, the increases could be even bigger," said Gary Claxton, vice president with the Kaiser Family foundation. "We've heard stories about insurers asking for bigger employee contributions for next year's coverage."

Watts said she's not aware of any factor that could help drive down costs in the near term.

"Health reform mandates new levels of coverage that will increase employers' costs at least until 2014.," she said

For example, beginning next year, employers will have to provide coverage for dependents of employees till age 26.